Barnes and Noble says agency pricing has allowed it to invest in its nook readerUS book retailer Barnes and Noble has criticised the Department of Justice’s proposed settlement with publishers accused of colluding over the prices of e-books.

In order to sell through Apple’s iBooks store publishers agreed to adopt the Agency pricing model under which publishers set the final retail price and pay the retailer a commission.

They subsequently extended the model to other retailers including Amazon’s Kindle store.

In April the DOJ accused Apple and publishers Hachette, HarperCollins, Macmillan, Simon and Schuster and Penguin of colluding in their agreement to move to agency pricing.

All the companies deny the charge however Simon & Schuster, Hachette and HarperCollins settled with the DoJ to avoid further legal action.

The DOJ’s proposed settlement requires publishers to cancel existing agency pricing contracts and bars them from re-introducing the pricing model for two years.

It also allows retailers to set prices and to discount them provided their discounting fits within a prescribed model that means they make money on their overall ebook sales.

The terms of the settlement must be approved by a court and are currently open for public comment.

In a court filing Barnes and Noble says agency pricing has “brought more competition to the sale of e-books” through the emergence of companies who no longer have to compete with claimed loss-leading by Amazon.

Its submission also claims “agency has resulted in lower e-book prices” as publishers seek to compete between themselves for sales and market share.

The retailer also highlights that under agency pricing retailers make more money per book than they did under the wholesale system while publishers make less.

The company says the extra revenue has allowed it to invest in it’s nook ereader and platform.

Barnes and Noble says: “the agency model has enabled innovation, with e-book distributors developing new products to differentiate themselves. Agency has encouraged new participants to invest in e-books. Barnes & Noble, for example, has introduced multiple versions of its e- reader, the NOOK; a self-publishing platform, PubIt!; and lending and Read-in-Store programs.

“The competition with Barnes & Noble and others also has led to Amazon responding with improved e-readers of its own. The ultimate beneficiary has been the consumer, who has enjoyed more choice and more competition on products and service. Thus, it is truly unfortunate and misguided that the proposed settlement seeks to undo and regulate contracts that have protected competition and consumers.”

In its filing Barnes and Noble claims the proposals go beyond those that “would be ordered by a court if the Government prevailed at trial” and calls for the court to “reject the regulatory provisions of the proposed settlement as being against the public interest”.